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Ilian Yotov is a longtime FX Strategist, known among industry peers as the creator of The Quarters Theory, a revolutionary methodology applied to the price behavior of currency exchange rates. His FX market analysis, outlook and forecasts are sought by popular financial publications worldwide... More
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  • Top 10 Forex Events Outlook: Aug. 12-16

    Aug. 11, 2013 (Allthingsforex.com) - The euro will take the center stage in the week ahead as traders anticipate the GDP estimate from the euro-zone to confirm expectations that the 17-nation economy has finally returned to growth in the second quarter of the year.

    In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

    1. JPY- Japan GDP- Gross Domestic Product, the main measure of economic activity and growth, Sun., Aug. 11, 7:50 pm, ET.

    Abenomics is expected to continue to make a positive impact in Japan with the GDP estimate forecast to show that the world's third-largest economy stayed on a growth path, expanding by 0.9% q/q in the second quarter of 2013 after ending the recession and growing by 1.0% q/q in the first quarter of the year. The JPY strength could continue as positive economic data from Japan reduces expectations of the need for additional easing measures by the Bank of Japan.

    2. GBP- U.K. CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of England, Tues., Aug. 13, 4:30 am, ET.

    Inflationary pressures in the U.K. are expected to pull back to 2.8% y/y in July from the 2.9% y/y reading in June. Subdued inflation and upbeat economic data from the U.K. have significantly reduced the odds of more easing by the Bank of England, fueling a GBP rally that could extend if the economy strengthens further.

    3. EUR- Euro-zone ZEW Economic Sentiment Index, a leading indicator of economic conditions measuring the outlook of financial experts, Tues., Aug. 13, 5:00 am, ET.

    The trend of improvement in the economic outlook is expected to continue with the ZEW index forecast to show a reading of 40.3 in August compared with 36.3 in the previous month. A more optimistic outlook should keep the euro supported.

    4. USD- U.S. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Tues., Aug. 13, 8:30 am, ET.

    Consumer spending in the U.S. is forecast to increase but at a slower pace by 0.2% m/m in July compared with 0.4% m/m in the previous month. The pressure on the USD could increase if economic data from the U.S. begins to soften.

    5. GBP- Bank of England Meeting Minutes, a detailed report of the bank's latest meeting containing an outlook on monetary policy and the economy, Wed., Aug. 14, 4:30 am, ET.

    As the new Governor Mark Carney stated last week, the Bank of England has designated 7% unemployment as the threshold level to signal the end of easy monetary policy. Similar to the July meeting, a 9-0 vote against more QE will not be a surprise and will make it clear that policy makers are not in a hurry to do more easing. The GBP should remain well bid if the minutes reveal that expansion of the Asset Purchase Program is off the table for the time being.

    6. EUR- Euro-zone GDP- Gross Domestic Product, the main measure of economic activity and growth, Wed., Aug. 14, 5:00 am, ET.

    In the first quarter of the year, the euro-zone economy failed to return to growth and contracted by 0.2% q/q. However, the prolonged recession may have ended in the second quarter with the 17-nation economy forecast to grow by 0.2% q/q. With the recessionary period of three consecutive quarters finally coming to an end, the EUR rally could extend further on optimism that the euro-area might be turning a corner.

    7. GBP- U.K. Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Thurs., Aug. 15, 4:30 am, ET.

    U.K. consumers are expected to keep their wallets open with retail sales forecast to register a larger increase by 0.7% m/m in July compared with the 0.2% m/m in June. A strong retail sales report could give the GBP a boost.

    8. USD- U.S. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Thurs., Aug. 15, 9:15 am, ET.

    Another month of expansion in the U.S. industrial sector is forecast to bring the overall industrial production gauge higher with a 0.5% m/m increase in July, after growing by 0.3% m/m in the previous month.

    9. USD- U.S. Housing Starts, an important gauge of housing market activity measuring new home construction, Fri., Aug. 16, 8:30 am, ET.

    Housing starts are expected to maintain their upward momentum with an increase by 910K in July from 840K in June, while building permits inch closer to the one million mark. The USD could benefit from a report that confirms that the housing market recovery is still intact.

    10. USD- U.S. Consumer Sentiment, the University of Michigan's monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Aug. 16, 9:55 am, ET.

    The preliminary estimate of the U.S. consumer sentiment index for the month of August is forecast to show a reading of 85.6, slightly higher than 85.1in July. A weekly sequence of decent U.S. economic data should keep the expectations of a Fed tapering in September unchanged.

    Tags: USD, DIA, SPY, QQQ, forex, fx
    Aug 11 12:39 PM | Link | Comment!
  • Top 10 Forex Events Outlook: Aug. 5-9

    Aug. 4, 2013 (Allthingsforex.com) - In the week ahead, traders will watch closely the monetary policy decisions of the Reserve Bank of Australia and the Bank of Japan, as well as the Bank of England inflation report, while also keeping an eye on a sequence of data that should offer more insights on the sustainability of the recovery in the U.K. and the euro-zone.

    In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

    1. EUR- Euro-zone Services PMI, a leading indicator of economic conditions measuring activity in the services sector, Mon., Aug. 5, 4:00 am, ET.

    The final reading is expected to be in line with the preliminary estimate which showed activity in the euro-zone services sector inching higher to 49.6 in July from 48.3 in June. With the manufacturing sector finally expanding after a year and a half of contraction, the EUR could stay supported as the services index gets closer to the 50 boom/bust line.

    2. GBP- U.K. Services PMI, a leading indicator of economic conditions measuring activity in the services sector, Mon., Aug. 5, 4:30 am, ET.

    Another strong report is expected from the U.K. services sector with the index forecast to jump to 57.4 in July from 49.6 in June. The GBP could attract more bids if the report is as good as anticipated which will reduce the odds of more easing by the Bank of England.

    3. EUR- Euro-zone Retail Sales, an important gauge of consumer spending measuring sales at retail establishments, Mon., Aug. 5, 5:00 am, ET.

    Consumer spending in the euro-area is forecast to drop by 0.6% m/m in July compared with the 1.0% m/m increase in the previous month. A weak retail sales data could weigh on the EUR on expectations that the European Central Bank would be stuck in an easing mode longer than the Federal Reserve and other central banks.

    4. USD- U.S. ISM Non-Manufacturing Index, a leading indicator of economic conditions measuring activity in the services sector, Mon., Aug. 5, 10:00 am, ET.

    Activity in the U.S. services sector is expected to pick up the pace with the ISM Non-Manufacturing Index forecast to increase to 53.2 in July from 52.2 in June. Despite of the Fed's assurance that monetary policy will remain accommodative for the "foreseeable future", further improvement in U.S. economic data could give the USD a boost on expectations that tapering of asset purchases may be still on track for September or October.

    5. AUD- Reserve Bank of Australia Interest Rate Announcement, Tues., Aug. 6, 12:30 am, ET.

    The inconsistency of the Australian economic reports in recent months and signs of a slowdown in China, Australia's largest trading partner, have increased the odds of a rate cut by the Reserve Bank of Australia. This is why a 0.25% reduction at this meeting would not be a surprise. The Australian dollar could see pressures rising if the Reserve Bank of Australia cuts the benchmark rate or hints of an impending rate cut in the near future.

    6. GBP- U.K. Industrial Production, the main gauge of industrial activity measuring the output of factories, mines and utilities, Tues., Aug. 6, 4:30 am, ET.

    Months of consistent improvement in the services and the manufacturing indexes have shown promising signs that the U.K. is on a path to recovery. The report is expected to be in line with this trend as industrial production grows by 0.7% m/m in June after a flat reading in May. The GBP should be able to maintain its bullish stance if the U.K. economic data continues to boost optimism.

    7. CHF- Swiss CPI- Consumer Price Index, the main measure of inflation preferred by the Swiss National Bank, Wed., Aug. 7, 3:15 am, ET.

    After rising by 0.1% m/m in June, the Swiss inflation gauge is forecast to return back in deflation territory with a drop by 0.3% m/m in July. Should deflation continue to be an issue, the Swiss National Bank will be in no hurry to let go of the franc ceiling which was set at 1.20 per euro in September, 2011.

    8. GBP- Bank of England Inflation Report, the central bank's official analysis and outlook on inflation and the economy, Wed., Aug. 7, 5:30 am, ET.

    While the CPI remains above the Bank of England's 2% target at 2.9% y/y, inflation in the U.K. has subsided from record highs above 5% last year. If policy makers expect this trend to continue and forecast a "nascent recovery" in the months ahead, the report will reduce the probability of more QE by the Bank of England and could boost the GBP as an alternative to currencies whose central banks are committed to monetary policy easing.

    9. JPY- Bank of Japan Interest Rate Announcement, Thurs., Aug. 8, around 12:00 am, ET.

    With economic conditions beginning to improve, the Bank of Japan wouldn't need to get more aggressive at this point but will be likely to reaffirm its commitment to open-ended QE until the 2% inflation target is in sight. As the monetary policies of the Fed and the Bank of Japan diverge in the months ahead, the U.S. dollar should be able to resume its bullish trend against the yen.

    10. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., Aug. 8, 8:30 am, ET.

    In the aftermath of last week's four-year low reading of 326K, the U.S. jobless claims are forecast to stay within range, rising slightly to 335K. Although the non-farm payrolls were weaker than expected, the USD should continue to benefit from improving labor market conditions in the United States.

    Tags: DIA, SPY, QQQ, USD, forex, fx
    Aug 04 10:54 AM | Link | Comment!
  • Top 10 Forex Events Outlook: Jul. 22-26

    Jul. 21, 2013 (Allthingsforex.com) - After several days of trying to gauge the odds of tightening of the Fed's monetary policy, in the week ahead traders will be back to watching a combination of economic data that will offer more details on the state of the world's largest economies.

    In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

    1. USD- U.S. Existing Home Sales, the main gauge of the condition of the U.S. housing market measuring the number of closed sales of previously constructed homes, condominiums and co-ops, Mon., Jul. 22, 10:00 am, ET.

    The report could confirm that the housing market recovery is still on the right track with sales of existing homes forecast to increase to 5.27 million in June, compared with 5.18 million in May.

    2. JPY- Japan Trade Balance, an important gauge of economic activity measuring the difference between imports and exports, Tues., Jul. 23, 7:50 pm, ET.

    Voters in Japan gave their support to Abenomics this weekend and the weaker yen should contribute to the trend of improvement in the Japanese economy, including the balance of trade which is forecast to show a shrinking deficit of 150 billion yen in June compared with 996 billion yen trade deficit in May. Signs that the economy is getting better could lend some support to the yen on reduced expectations that the government and the Bank of Japan would step up their efforts to devalue the currency and to spur economic growth.

    3. EUR- Euro-zone Manufacturing and Services PMI- Purchasing Managers Index, a leading indicator of economic conditions measuring activity in the manufacturing and services sectors, Wed., Jul. 24, 4:00 am, ET.

    Although the indexes have been inching higher in recent months, the chronic contraction in the euro-zone's manufacturing and services sectors is expected to continue. The Manufacturing PMI is forecast to stay in contraction territory below the 50 boom/bust line for another month with a reading of 49.1 in July from 48.8 in June, while the Services PMI also heads a bit higher but still below 50 with a preliminary estimate of 48.9 in July from 48.3 in the previous month. A weaker than expected data should weigh on the EUR by confirming expectations that the European Central Bank will remain stuck in an easing mode.

    4. USD- U.S. New Home Sales, an important gauge of housing market conditions measuring sales of newly-constructed homes, Wed., Jul. 24, 10:00 pm, ET.

    In line with the existing home sales, new home purchases in the U.S. are also expected to increase to 482K in June from 476K in May.

    5. NZD- Reserve Bank of New Zealand Interest Rate Announcement, Wed., Jul. 24, 5:00 pm, ET.

    With the kiwi dollar pushed lower in recent months and all other central banks assuring the markets that monetary policy will stay accommodative, the Reserve Bank of New Zealand would not be likely to deviate from the current course. The NZD could weaken further if the Reserve Bank of New Zealand still sees its currency as too strong and hints that tightening policy will not be in the cards for the foreseeable future.

    6. EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Thurs., Jul. 25, 4:00 am, ET.

    The business outlook in the euro-zone's largest economy is forecast to be more optimistic as the Ifo index rises to 106.3 in July, compared with the reading of 105.9 in the previous month.

    7. GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Jul. 25, 4:30 am, ET.

    Three consecutive quarters of contraction in the U.K. were followed by a quarter of growth in Q3 2012 only to see the economy contracting again by 0.3% q/q in the final quarter of last year. As a result, fears of unprecedented triple-dip recession in the U.K. escalated. Fortunately, in the first quarter of the year, the U.K. economy managed to avoid another recession expanding by 0.3% q/q and is expected to grow even stronger by 0.6% q/q in Q2 2013. The GBP could stage a rally as a result of a better GDP report which coupled with the 9-0 vote against more QE should reduce significantly the odds of more easing by the Bank of England.

    8. USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., Jul. 25, 8:30 am, ET.

    The U.S. jobless claims are forecast to reach 339K, staying close to last week's new record low of 334K. Another positive report from the U.S. labor market should keep the USD supported on expectations of a Fed tightening sooner rather than later.

    9. JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., Jul. 25, 7:30 pm, ET.

    Two months of rising inflationary pressures could push the Japanese national core inflation gauge to 0.3% y/y in June from 0% y/y in May and -0.4% y/y in April. With the index exiting deflation territory and heading towards the Bank of Japan's 2% inflation target, the report could reduce expectations that the Japanese central bank will need to step up its QE campaign, which could mean less pressure on the yen.

    10. USD- U.S. Consumer Sentiment, the University of Michigan's monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Jul. 26, 9:55 am, ET.

    The U.S. consumer sentiment index is forecast to be revised slightly higher to 84.0 in July from a preliminary estimate of 83.9. Another week of decent U.S. economic data could keep the markets pricing the start of the Fed tapering of monthly asset purchases in September/October.

    Tags: DIA, SPY, QQQ, USD, forex, fx
    Jul 21 3:12 PM | Link | Comment!
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